Kinetic Engineering Limited, in its recently concluded board meeting, has approved the raising of over Rs 54 crore from various available sources including from promoters and sale of its non-core assets. The objective is to reduce debt, strengthen the auto component business and to invest in the electric vehicle subsidiary. For these, the board has approved the issue of 22.85 Lakh equity shares on preferential basis, to promoters and promoter group companies totalling Rs 26.27 crore at a price of Rs 115 per share (including a premium of Rs 105 per share).
This is the 3rd year in a row that the promoters are increasing their stake in the company, which will now stand at 59.35%. The previous year’s conversion included 9,95,000 shares in 2021-22, and 11,72,879 shares in 2022-23.
The board has also approved Optionally Convertible Cumulative Preference Shares (OCCPS) totalling Rs 2.18 crore to Jayashree Firodia Trust, part of the promoter group. In this manner nearly Rs 28 crore would be raised by the company through equity, significantly increasing its net worth. In addition, the board approved the sale of excess land parcels of the company at a consideration of Rs 25.50 crore after following due process including valuation done by a registered valuer.
Ajinkya Firodia, Managing Director, Kinetic Engineering Limited, said. “KEL has completed its restructuring of auto-components and turned around its operations over the past 3 years and achieved continuous growth in net profit during the last couple of years. Now we strongly believe that the time has come to cash in on all the efforts, learnings and opportunities that lie ahead of our current business and future potential.
We would like to utilize these funds for three main goals: ·Build a healthy balance sheet by further reducing debt of Rs 18 crore; ·Build a strong auto component business by revamping our facilities, investing in new equipment, investing for new business and in working capital and capex in KEL to the tune of Rs 13 crore to Rs 15 crore; and Build a strong future in EV by capitalizing its subsidiary company, Kinetic Watts & Volts Ltd. (KWVL), with additional equity of Rs 22 crore to 23 crore.”
“In the current business, the existing customers including prestigious players such as Mahindra & Mahindra as well as American Axle have indicated various new business opportunities in the transmission and axle domain. Further the company is in the process of adding new customers including Sonalika Tractors & Case New Holland. It is also bullish on the new product line of making chassis for 2 and 3- wheelers beginning with the very exciting project for E-Luna. All these opportunities require a focus on revamping the facilities, working capital, new machinery and capacity enhancement. KWVL shall continue to tap the glorious opportunity in the booming EV space where KEL has already developed axles, chassis & various other parts. It recently revived and restructured its paint shop and CED shop to offer fully painted body parts to EV players. Various other plans in EV space are underway and shall be revealed in phases as they fructify,” he said.
